Big money betting big on housing

The latest sign of a housing boom: investors are clamoring to buy up home building stocks, homes, and undeveloped land.

NEW YORK (CNN Money)

Investors are betting big on the housing recovery.

Hedge funds and private equity firms have been rushing in to buy up companies and assets in every part of the housing supply chain, including undeveloped land, home builders, foreclosed homes, and building parts manufacturers.

One of the most notable moves is coming from hedge fund manager John Paulson, best known for his big (and lucrative) bets against sub prime mortgages in 2006 and 2007.

Now, he's turned his attention to snapping up undeveloped land in areas hardest hit by the housing crisis. "Land is the accordion in the home building equation," said Michael Barr, who runs Paulson's real estate investments. "It falls the most in a downturn, but also rises the most in an upturn."

Over the past two years, Paulson & Co has bought up enough land in California, Arizona and Nevada to build up to 25,000 homes and is aggressively scouting for more, according to Barr.